Versigent Q2 Earnings Call Highlights

Versigent (NYSE:VGNT) reported second-quarter results marked by double-digit sales growth, higher adjusted EBITDA margins and the launch of its first quarterly dividend as the newly independent company navigates softer global vehicle production and elevated program-launch activity.

Chief Executive Officer Joe Liotine said the company’s performance reflected its engineering capabilities, operating discipline and ability to support customers’ complex power and data needs. During the quarter, Versigent received more than $2.8 billion in new awards and launched 39 large-scale global programs for 22 new and existing customers. Liotine said those launches achieved more than 99% quality and 99% on-time delivery.

“Versigent delivered a solid quarter,” Liotine said, citing double-digit net sales growth, expanding bookings and execution on large-scale customer programs. He added that the company is pursuing selected adjacent-market opportunities, including commercial vehicles, agriculture, battery energy storage and robotics, though its previously communicated 2028 outlook does not assume a meaningful contribution from these newer opportunities.

Second-Quarter Financial Results

Chief Financial Officer Doug Ostermann said second-quarter net sales rose 11% year over year to $2.4 billion. Excluding foreign exchange and commodity movements, adjusted net sales increased about 5%, driven primarily by higher production volumes in North America and Asia-Pacific. Softer volumes in Europe, the Middle East and Africa partly offset those gains.

• Adjusted EBITDA increased 25% from a year earlier to $272 million.
• Adjusted EBITDA margin expanded 120 basis points to 11.1%.
• Net income attributable to Versigent rose 10% to $118 million.
• Adjusted net income was $138 million, while adjusted diluted earnings per share totaled $1.92.
• Free cash flow was $107 million, essentially unchanged from the prior-year quarter.

Ostermann said net income growth occurred despite $35 million in incremental interest expense, primarily tied to debt financing completed during the first quarter of 2026. The company’s adjusted effective tax rate was 27% in the second quarter, compared with 16% a year earlier, largely due to unfavorable discrete tax items in 2026 versus favorable items in the prior-year period. Versigent maintained its expectation for a full-year adjusted effective tax rate of approximately 23%.

Sales growth was strongest in Asia-Pacific, where net sales increased 24% to approximately $825 million and adjusted net sales rose roughly 15%. In the Americas, net sales climbed 11% to about $1.1 billion, with adjusted net sales growth of about 6%. EMEA sales declined 6% to approximately $524 million, while adjusted net sales fell 11%, reflecting weak regional production and the end of production on certain programs.

The company said China export production remains a meaningful contributor to its Asia-Pacific performance. Ostermann said more than 35% of the company’s China production went into vehicles exported outside China during the second quarter, up from more than 25% in the first quarter.

Margins, Copper Costs and Cash Flow

Versigent said higher volumes contributed about $30 million to the year-over-year increase in adjusted EBITDA, while operational performance contributed approximately $38 million. The operational-performance category included purchasing savings, material productivity, value engineering, manufacturing productivity and footprint actions. It also included roughly $7 million in IEEPA tariff refunds.

Commodity costs remained a margin headwind, reducing margins by about 90 basis points during the quarter. Ostermann said the company faces a lag of roughly three to four months between changes in copper prices and customer pass-through recoveries under contractual escalation agreements. About three-quarters of the company’s copper exposure is covered by such agreements, with the remainder managed through financial hedges and customer recovery actions.

Management said the sharp increase in copper prices during the first quarter created a temporary pressure on margins, but that effect began to ease in the second quarter as recoveries caught up. Assuming copper prices remain relatively stable, the company expects the pressure to continue diminishing over coming quarters.

Capital expenditures rose $9 million year over year to $51 million, reflecting investments for higher launch activity expected in the second half. Separation-related costs totaled $22 million as Versigent continued building its standalone operating structure. The company ended the quarter with approximately $554 million of cash, $1.4 billion of total available liquidity and net debt of roughly $1.7 billion, representing a net leverage ratio of approximately 1.8 times.

2026 Outlook and Capital Returns

Versigent raised and tightened its reported net sales outlook for 2026 to a range of $9.4 billion to $9.6 billion, from prior guidance of $9.1 billion to $9.4 billion. Ostermann said the increase was entirely due to macro-driven factors, including higher copper-related pass-throughs and a stronger Chinese renminbi against the U.S. dollar.

The company reaffirmed its adjusted EBITDA outlook of $950 million to $1.03 billion and free-cash-flow guidance of $200 million to $300 million, including approximately $70 million of separation-related costs. It continues to expect approximately 2% adjusted net sales growth for the year.

Management said the second-half outlook accounts for lower global industry production assumptions, customer schedule reductions in some programs and the temporary volume and absorption impacts associated with its elevated launch calendar. However, the company said its launches, customer positioning and increasing content on key programs support above-market growth expectations.

Versigent also declared its inaugural quarterly dividend of $0.13 per ordinary share, payable Sept. 18 to shareholders of record as of Sept. 4. The company previously announced a $250 million share repurchase authorization. Ostermann said Versigent expects to generate approximately $1 billion in cumulative free cash flow between 2026 and 2028, supporting investments, balance-sheet flexibility and shareholder returns.

About Versigent (NYSE:VGNT)

Versigent PLC is involved in the design, manufacturing and delivery of low and high voltage power electrical architectures. Versigent PLC is based in SCHAFFHAUSEN, Switzerland.

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